Swap Transaction Compliance and Implementation Schedule - Documentation and Margining Requirements
|Proposal Date||Comment Deadline||Final Rule Issue|
|September 20, 2011||November 4, 2011||TBA|
On September 8, 2011, the Commodity Futures Trading Commission (CFTC) held an open meeting to consider the issuance of proposed rulemakings under the Dodd-Frank Act. One of the agenda items was a proposed rule regarding the implementation timeline for documentation and margining requirements for swap participants.<ref>Open Meeting on Two Proposed Rules under the Dodd-Frank Act. CFTC. Retrieved on September 8, 2011.</ref>
One of the mandates of the Dodd-Frank Act is the creation, implementation and enforcement of rules regarding the trading and clearing of swaps. These rules include comprehensive regulation of swap dealers and major swap participants (SD/MSPs). The CFTC has proposed, and is in the process of finalizing, rulemakings on documentation and margining requirements for SD/MSPs. After these rules are finalized, the commission will begin phasing in compliance for various swap entities, depending on the entity's level of activity and sophistication.
Summary of the Rule Proposal
- The commission plans require compliance in three phases, depending on a swap entity's level of activity and sophistication:
- Phase 1 - 90 days after a final ruling involves "Category 1" entities, which include swap dealers and major swap participants, security-based swap dealers and major swap participants, and active funds.
- Phase 2 - 180 days after a final ruling involves "Category 2" entities, which will include commodity pool operators, private funds, employee benefit plans, persons predominantly involved in the business of banking or financial activity, provided that the entity is not a third-party subaccount.
- Phase 3 - 270 days after a final ruling will include any "Category 2" entities which are third-party subaccounts, plus all other swaps.
Prior to determination of a final ruling, these rules must be finalized by the CFTC:
- SD/MSP rules on registration, reporting, confirmation, and protection of collateral for uncleared swaps, and
- definitions of swap related terms - joint rulemaking with the SEC.
Related Documents: Fact Sheet, Q&A, Federal Register Entry